“ENERGY SECURITY OF INDIA”

FINAL DRAFT SUBMITTED IN THE FULFILMENT OF THE COURSE TITLED

POLITICAL SCIENCE-II

SUBMITTED TO:

Dr. S. P. SINGH

REGISTRAR & PROFESSOR

SUBMITTED BY:

NAME: KESHAV KUMAR

COURSE: B.A., LL.B (Hons.)

ROLL NO: 1737

SEMESTER: 2nd

CHANAKYA NATIONAL LAW UNIVERSITY, NYAYA NAGAR,

MITHAPUR, PATNA – 800001

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 DECLARATION BY THE CANDIDATE

I hereby declare that the work reported in the B.A., LL.B (Hons.) Project Report entitled

“ENERGY SECURITY OF INDIA” submitted at Chanakya National Law University is an

authentic record of my work carried out under the supervision of Dr. S. P. SINGH. I have not

submitted this work elsewhere for any other degree or diploma. I am fully responsible for the

contents of my Project Report.

SIGNATURE OF CANDIDATE

NAME OF CANDIDATE: KESHAV KUMAR

CHANAKYA NATIONAL LAW UNIVERSITY, PATNA.

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 ACKNOWLEDGEMENT

I would like to thank my faculty Dr. S. P. SINGH whose guidance helped me a lot with
structuring my project.

I owe the present accomplishment of my project to my friends, who helped me immensely with

materials throughout the project and without whom I couldn’t have completed it in the present

way.

THANK YOU,

NAME: KESHAV KUMAR

COURSE: B.A., LL.B. (Hons.)

ROLL NO: 1737

SEMESTER – 2nd

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TABLE OF CONTENT

1. INTRODUCTION.....................................................................................................................05

 AIM AND OBJECTIVE

 HYPOTHESIS
 RESEARCH METHEDOLOGY
 SOURCE OF DATA
 LIMITATION OF STUDY

2. ENERGY SUPPLY SECTOR...................................................................................................08

3. ENERGY DEMAND AND CONSUMPTION IN INDIA........................................................11

4. INDIA’S ENERGY SECURITY CHALLANGES...................................................................13

5. CONCLUSION AND SUGGESTION......................................................................................16

BIBILIOGRAPHY……………………………………………………………………………19

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 1. INTRODUCTION: ENERGY SECURITY OF INDIA

The demand for energy in India has grown at a rapid rate during the past decade. The rising
demand for energy is putting great pressure on the already limited domestic energy sources in the
country. Adding to this is the pre-eminent need of providing access to a large segment of
population that currently lacks dependable and modern sources of energy will release a
significant amount of suppressed demand. As per TERI projections, in the reference scenario, the
dependence on imported fossil fuels is expected to rise in the future, putting greater pressure on
the limited domestic resources. Further aggravating this rising demand–supply gap is the
necessity of mitigating the adverse environmental implications of energy consuming and
producing industries. Carbon Dioxide (CO2) emissions from energy industries have the largest
share in total emissions. To add to this, key consuming sectors such as transport and industry are
also large sources of CO2 emissions.1

Energy security has been defined, debated, and discussed widely, in both policy discourse and
literature. Various dimensions have been associated with the concept of energy security and
accordingly, different definitions have been propounded to contextualize the issue. Some of these
dimensions include equity, efficiency, environmental sustainability, and geopolitics.

For a nation to develop and sustain itself, a strong economic base is needed along with a dynamic
energy sector. The same holds true for a country like India. As a country grows, the demand for
energy increases. The increase in consumption of energy happens not only at the state level but
also at the industrial and most importantly at the individual level. The increase in energy demand
is measured by looking at the consumption of different sources of energy, such as crude oil,
natural gas, coal, solar power, 5 hydropower, nuclear energy and other renewable sources of
energy, over a period of time.2

Energy is the prime mover of a country’s economic growth. Availability of energy with required
quality of supply is not only key to sustainable development, but the commercial energy also
have a parallel impact and influence on the quality of service in the fields of education, health
and, in fact, even food security. In the last decade India has been one of the most developing
countries of the world with an average GDP growth of around 6% and around 8% in last couple
of years. With the growing GDP of 8%, India is moving parallel to China in terms of
development, but the energy consumption is catching up as well. But the country is finding it
increasingly difficult to source all the oil, natural gas, and electricity it needs to run its booming
factories, fuel its cars, and light up its homes. According to a report by IEA (International Energy
Agency), India needs to invest a total of 800 billion dollars in various stages by 2030 to meet its

1
Energy security in India, (02/04/2018: 06:05PM) http://www.ey.com/in/en/industries/oil---gas/indias-energy-
security
2
Id.

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energy demand. India accounts to around 2.4% of the annual world energy production, but on the
other hand consumes 3.3% of the annual world energy supply.3 And this imbalance is estimated
to surpass Japan and Russia by 2030 placing India into the third position in terms of annual
energy consumption. Therefore, after summing up all the energy issues, energy security has been
identified as the only tool to overcome the energy concerns.4

According to the Integrated Energy Policy 2006, energy security of India is quoted as below:

“We are energy secure when we can supply lifeline energy to all our citizens irrespective of their
ability to pay for it as well as meet their effective demand for safe and convenient energy to
satisfy their various needs at competitive prices, at all times and with a prescribed confidence
level considering shocks and disruptions that can be reasonably expected”.

AIMS AND OBJECTIVES:

1. The researcher tends to analyze all the key issues facing the country’s energy security and
development.

2. The researcher tends to establish relation between Energy Supply Sector and Energy Demand
Sector.

3. The researcher tends to examine the production and consumption pattern of crude oil, coal and
natural gas since they are the major sources of energy for the Indian economy.

HYPOTHESIS:

The researcher tends to presume that energy security of India is growing as prime concern for
Indian government for economic and sustainable development.

RESEARCH METHODOLOGY:

The researcher will be relying on Doctrinal method of research to complete the project.

SOURCES OF DATA:

The researcher will be relying on both primary and secondary sources to complete the project.

1. Primary Sources: Draft of National Energy Policy (by NITI Aayog)

3
Id.
4
Id.

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2. Secondary Sources: Books, newspapers and websites.

LIMITATIONS OF THE STUDY:

The researcher has monetary and time limitations in completing the project. Further emphasis
will be given only on work on India’s Energy Security and framework of which Indian policy for
energy security.

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 2. Energy Supply Sectors

India is one of the largest energy consumer in the world after United States, China and Russia.
The country’s primary energy consumption stood at 563.5 million tonnes of crude oil equivalent
(MTOE) in 2012, which is an increase of 5.1 per cent over the primary energy consumption of
534.8 MTOE in 2011 (BP Statistical Review of World Energy, 2012, 2013). The Indian primary
energy consumption is 4.52 per cent (approx.) of the global energy consumption. The Energy
Information Administration (EIA) of United States in its analysis of India has projected that
India along with China will account for a greater share in energy demand till 2035 (EIA, 2013).
The energy consumption of the country has been increasing at an average rate of 5 per cent on a
yearly basis since 1970.5

The Indian energy sector comprises crude oil, natural gas, coal, hydro, nuclear and other
renewable sources of energy. Table 1 presents the consumption pattern of different sources of
energy in India in the year 2012. Table 1 shows that coal is the dominant source of energy
contributing more than 50 per cent of the total energy demands. The next are crude oil and
natural gas with a share of 30.45 per cent and 8.71 per cent, respectively. The other sources of
energy such as hydro, nuclear and other renewable sources account for the remaining 8 per cent
(approx.) of the total energy consumption.

In India the unbalanced consumption and demand equation clearly reflect the shortages in
supply. The demand for the primary sources of energy like oil, natural gas and electricity

5
Energy security in India, (02/04/2018: 06:20PM) http://www.ey.com/in/en/industries/oil---gas/indias-energy-
security

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outstrips the production capacities in the nation. India lags behind China in its overall energy
production, as China is among the top 5 energy producers in the world. Graph 2 below depicts
the growth projections in production capacities of the 3 countries for primary energy
requirements. India is not expected to hit any major increase in its production capacities of any
of the primary sources of energy. While an increase is expected in the natural gas production
rates in the next 5 years due to the recent KG basin discoveries of potential reserves of over 360
mmboe (barrels oil equivalent) but a huge import probability is still there. For petroleum and
crude oil segment India’s production capacities might not experience any significant change,
where as the refined products supply is expected to move upward. A comparison of the demand
supply scenario clearly shows that the sector might suffer significant demand and supply gaps
especially for petroleum, natural gas and electricity segments which are difficult to bridge
without any significant imports and global tie-ups.6

(i) Oil & Gas Sector

In the oil sector, India has adopted an aggressive policy to expand domestic production by
developing a transparent regime for award of oil blocks. So far, 234 blocks have been awarded
after 8 rounds of NELP. Exploration of oil and gas are long term investments. So far there have
been major finds by Reliance, ONGC, Gujarat State Petroleum Corporation and Cairn Energy.
The availability of oil, of nearly 6 million tonnes per annum, which is 20% of country's domestic
production by Cairn Energy is a very interesting story and should give encouragement to oil
exploration. In the 1960s, exploration was done by ONGC and it was found that there was no
possibility of oil in these blocks in Rajasthan. Subsequently; the block was with the international
company Shell. They could not find any oil in the area. For nearly 30 years, this block continued
to be unexplored, the general impression was that Rajasthan does not have oil. The block was
taken up by a small group from Scotland. A geologist, after considering the data, felt that it may
be possible to find oil in the area. Subsequently, in a period of 4 – 5 years, the comparatively
new player developed a number of oil fields.7

6
Id.
7
Harsh Kanani, Energy security in India

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(ii) Coal Sector

To augment coal production, 203 coal blocks were awarded to private players, with more than 50
billion tonnes of coal reserves. There is, however, lethargy on the part of some of the private
players. Most of them have been moving slowly in getting these blocks explored expeditiously.
There have also been problems with environmental clearances. These issues will need to be
addressed. Most countries of the world exploit their coal reserves and the coal fields are
thereafter developed and re- forested. We have taken a very restrictive policy in the recent time.
No country can afford to let its mineral resources go unused and hope to grow economically. A
policy permitting exploration and re- forestation of the areas already mined would be necessary.
This is an area of very serious concern.8

(iii) Nuclear Energy

The domestic exploration of uranium mines has been confined, so far, primarily to Jharkhand
and Andhra Pradesh. The quality of uranium has been poor and the domestic production has not
picked up significantly. Exploration on this so far has not led to discovery of any major deposits.
While deposits were discovered in Meghalaya, there have been other issues which have clouded
the development of mines. A more aggressive policy for discovering more uranium and mining it
will be necessary to augment our resources. India has the second largest reserves of thorium in
the world. Part of the requirements of energy may be met by developing these. The present
approach for development of atomic energy is a 3-stage development. In the first stage, we are
developing the present atomic power plants. As part of the second stage, we will have to develop
the fast breeder reactors. After a large number of fast breeder reactors have been set up and
nearly 40,000 MW capacities are created, the thorium, along with spent fuel will be used to
further develop and sustain the nuclear plants.9

8
Id.
9
Id.

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 3. Energy Demand and Consumption in India

Demand

Graph 1 below depicts the expected growth in energy demand that the countries might face in the
near future for primary energy requirements of oil, natural gas and petroleum products. While the
growth rates stand significantly high for both India and China, US seem to exhibit minor growth
rates. As per EIU estimates India is expected to face high growth rates mainly in coal, natural gas
and electricity segments i.e. 7.2%, 6.5% and 6.6% respectively which is much higher than that of
US. China at the same time might experience a spur in its natural gas demand. The domestic
production capacities for these segments in India are not able to keep pace with the fast growing
demand hence a huge chunk of electricity, natural gas and crude oil is imported from foreign
countries. However the demand for coal might be fulfilled with the substantial domestic sources.
Indian businessmen believe that the market potential in the country is high but infrastructure
enhancements are inevitable. China is believed to be stronger than India in its infrastructural
aspects. Regulatory framework is rated excellent for US and average for both India and China.10

Consumption

Through the process of planned development undertaken over the last five decades, the country
has taken major strides in stepping up the production of primary commercial energy. Coal
continues to be the main source of primary commercial energy not only for direct energy use in
industry but also for indirect energy use through power generation. Concerted efforts made in
exploration and development of hydrocarbons has led to a significant step up in the production of

10
Supra note 5

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oil and natural gas. However, in the recent years, the production of crude oil has been
stagnating.11

The availability of hydro-electricity has also increased significantly. There have been additions
to nuclear power generation capacity as well as power generation from nuclear power plants. The
wind power generation has also picked up significantly during the last few years.

Graph 3 below depicts the expected growth in demand for energy across various sectors in India
by 2019-2020 as projected by world energy council. These projections are done as per the past
and current trends in the global business scenario and also takes into account the overall
availability of resources and the likely growth in the demand for energy in the economy. The
three major consumers for energy are expected to be the household segment, industrial sector
and the transport segment.

The current per capita commercial primary energy consumption in India is about 350 kgoe/ year
which are well below that of developed countries. Driven by the rising population, expanding
economy and a quest for improved quality of life, energy usage in India is expected to rise to
around 450 kgoe/ year in 2010 growing at a CAGR of 6.5 %. Graph 4 depicts the expected
consumption pattern in India over the next 5 years and the highest growth segments are coal,
natural gas, electricity and petroleum.

11
Id.

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 4. Indian's energy security challenges

The total energy consumption in India registered a CAGR of nearly 5% over the period from
2001 to 2011. As per existing estimates, in order to sustain an economic growth rate of 8%, the
primary energy supply is expected to grow at 5% over the next 20 years. Energy supply in India
is largely dominated by fossil fuels — coal, oil and gas — that form around three-fourths of the
country’s total primary energy supply.12

a) Import of Fossil Fuels

The energy requirements of Indian economy are estimated to increase substantially in the .next
two decades. According to Integrated Energy Policy, for a 9% growth over a sustained period,
imports of crude oil in 2031-32 may be between 362-520 million tonnes with import dependence
of 91%-94%. For natural gas, it may be 25-135 (Mtoe), which means an import dependence of
20%-57% of supply. Coal imports may be between 300- 736 (Mtoe), which may be an import
dependence of 34%-57%. Total import dependence may be 58%-67%, as against the current
level of 25%, with imports estimated at the higher end at 1,382 (Mtoe) and total energy
consumption at 2,077 (Mtoe). Clearly, the two major fuels - oil and coal – may require large
imports in the next two decades.

b) Lack of Exploration and Production

In India, there was hardly any investments in the activities of exploration and production in past
two decades. There are small oil fields that are been explored which can barely fulfil our oil
demand. The Cairn-Vedanta case is a live example leading to the barrier in the oil field
exploration and production. The pending case has directly affected the production of the
company and its exploration activities. In the coal sector, there has been 208 coal blocks been
awarded to various companies, but activities are yet to start in around 100 blocks. Natural Gas is
nowadays the measure issue as around a dozen gas-based plants are coming up in India. The KG-
Basin case is the only significant achievement showing the success of the E&P activities.

c) Shortage in the Storage Facilities

12
Energy Security Outlook, 2015 (TERI)

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To ensure energy security various risks are to be handled. The threat of energy security not only
arises from the lack of supply, but also due to the uncertainty of availability of imported energy.
Domestic production may also harm energy security. Supply risks from domestic production like
a strike in CIL or other coal producing company or in that case even railways may create a dent
in the energy security of India. As the major sources of energy are imported, there is a threat due
to lack of storage facilities in India. The major part of crude oil is been imported and there are
hardly any steps taken for its storage. During the economic crisis, India may suffer from shortfall
of crude oil for refining and will eventually purchase it at higher prices leading to decline in
country’s economy.

d) Rural Electrification

India has a major part of the population in the rural areas. Out of these, there are around 125000
villages that have no mark of electricity. Transmission lines are already been laid but not been
used as there is lack of interest in providing electricity to the rural population. India is suffering
from a deficit of around 12% on an average in terms of electricity and major share of this deficit
is due to the lack of electricity in rural areas. The per capita energy consumption in India is
around 750 KW which is far more less than China which is our competitor. Due to lack of
capability to pay high tariffs, private players in the power sector have ignored setting up a power
plant near the rural areas. REC Ltd. (Rural Electrification Corporation Ltd.), the only PSU in
India, was set up for rural electrification. Village electrification level India as on 2008 was
85.2%

e) Transmission and Distribution Losses

Our country is already suffering from electricity deficit and fuelling this concern is the hurdle of
T & D losses. India has an installed capacity of 167200 MW (Data from Ministry of Power, as
on 31 Oct 2010), but during transmission it suffers around 30% of the losses. This has also laid
to higher tariffs that are to be faced by the local consumers. There is a loss of power in the
agricultural sector as no defined schedule is been planned. Reduction in the T&D losses will help
India in supporting the energy efficiency and energy security of the nation.

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f) Unutilised renewable resources

India is been gifted with diversified renewable potential, but it has not been successful in
utilising its resources at the optimum levels. The nation has a potential of around 45000 MW
from Wind Power, close to 15000 MW from Small Hydro, 16000 MW from Biomass and can
produce 20 MW/sq km of Solar Power. But out of the above numbers, only 30% of the
renewable potential have been utilised. The electricity generation mix in India comprise of
around 10% of the renewable. There is lack of awareness among the people about the benefits of
renewable sources.

g) Energy Efficiency and Energy Conservation

Importance of energy efficiency and energy conservation has clearly come out from the various
supply scenarios and is again supported by rising energy tariffs. The concept of efficiency can be
applied in energy extraction, transportation, conversion, as well as in consumption. Further, the
same level of service can be provided by alternate means that require less energy. The major
areas where it can make a substantial impact are mining, electricity generation, electricity
transmission, electricity distribution, transport equipment pumping water, industrial production
and processes, mass transport, building design, construction, lighting and household appliances,
heating ventilation and air conditioning. It should also be noted that a unit of energy saved by a
user is greater than a unit produced as it saves on production, transport, transmission and
distribution losses. A “Negawatt” (a negative Megawatt) produced by reducing the use of energy
need, saves more than a Megawatt generated (Source: IEP 2006). According to the recent
statistics by TERI, there is a wastage of 30% of the power that is been supplied. There are lack of
energy auditors and energy managers. Only 500 energy managers are certified by BEE (Bureau
of Energy Efficiency) annually.

These were the major challenges that are obstructing India to deal with energy security. So, in
order to improve India’s chances to achieve the goal of energy security the major policy options
are been classified into two categories:

A) Reducing risks.

B) Dealing with risks.

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 5. Conclusion and Suggestions

Energy Security in India is the dream of the 21st century for the nation. And after implementing,
the above policies will definitely move India an inch closer to achieve the dream. Huge financial
investment especially in the energy sector is the need of the hour. CDM activities are equally
important to sustain the concept of energy security. The new era of renewable sources will play a
vital role in the nation’s target to be energy secured.

Energy is integral for an individual and collective progress of the society. It has become a
strategic commodity considering the implications it has on sustained growth of economy and
human development. Hence, it does not come as a surprise that it has acquired centre stage of
policy formulation for e.g. India Technology Vision 2035. International Energy Agency defines
it as “an uninterrupted availability of energy source at affordable price.

Energy is categorised as conventional and non-conventional. The Conventional Sources of

Energy includes coal, petroleum, natural gas etc. while the non-conventional energy consists of
solar, wind, geothermal, and biogas energy. The other classification is on scale of use i.e.
commercial purpose using coal, oil and gas, hydro, nuclear etc. and non-commercial like fuel
wood, charcoal, cow dung or animal waste.

The total energy mix of the country is predominantly fossil fuel, with coal being the largest
contributor. According the data released by the Central Electrical Authority of the totalled
installed electricity generation capacity, highest input of 61 % was from Coal. This share of
fossil fuel jumps to 70% once contribution of gas is included. However, the share of renewable
energy (RES) has been witnessing a rise and constitutes 13% of the total installed capacity in the
country. Nuclear staggers at 2% merely.

India is the fastest growing economy with FY16 recording a 7.6 % GDP growth. A strategic
component of this growth is the easy and cheap accessibility of the energy. The CAGR in India’s
primary energy demand for the period 2006-10 was by 8.3% and shows an increase
corresponding to the needs of an expanding economy. Looking at sector wise energy demand,
the largest has been from industry, which doubled in value addition with corresponding increase
in commercial energy usage share at 45%.

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The overall pace of growth in energy sector that once had high share of renewables (mainly from
large hydro projects) in its energy mix has over time tilted towards a larger increasing fossil fuel
based share in its generation capacity to meet the increasing demand. Further, the data FY 14
show that India’s net energy import bill was around 6.3% of GDP to support the supply
shortages, and it can spike significantly in the next decade.

According to Indian Energy Security Scenarios (IESS) which has been developed as energy
scenario building tool, India’s usage and demand at 2047 remains grim. Sector specific statistics
show that energy demand from the Industry will jump 5 times from the current level. Similarly
with increased economic development, there is expected to be an increase in mobility and
demand for both inter-city and intra-city passenger transport in India over the next few decades.
This will put an additional pressure. Apart from this Agriculture, Cooking, Electricity, Telecom
are other areas where the demand is likely to scale-up steadily.

The government aims complete rural electrification by 2020. So far the energy demand of rural
population was met through traditional sources like fire wood, or kerosene. The shift that is
underway is towards conventional sources of energy that invariably has increased pressure in the
demand of the fossil fuel based energy.

India’s share of energy consumption stands at 3.5% of the world’s global energy consumption
and is likely to be 10% by 2031. The total energy generation was 1048 Billion Units and for the
12th plan period (FY 13-17), the Government of India has targeted capacity addition of 88,537
MW. Coal continues to dominate the energy sector profile in the country. About two-third of the
country’s commercial energy demand is being met by it. India’s coal based power generation
capacity has jumped from 76 GW in 2008 to 164 GW in 2014, in line with expected increased
coal use.

The increasing gap between the energy demand and supply and other problem associated with
conventional energy sources has inspired to look beyond and make a progressive shift towards
renewable energy. Not only are they indigenous, non-polluting but are virtually in-exhaustive.
India, being a tropical country, enjoys abundant sunshine. India’s topography provides ample
opportunity for using solar, wind and small hydro resources. Country with its vast land resources
can sustain production of significant quantities of biomass.

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Renewables have enormous potential to meet the growing energy requirements of the increasing
population, while offering sustainable solutions to the global threats of climate change. India at
present is the fifth largest producer of the renewable energy and contributes 13% to the total
generation capacity.

India is a nation in transition. IESS 2047 highlights that the balance between the need of the
country and balancing between other variable will happen with leveraging of clean energy mix.
There are some hiccups that still persists with renewables primarily access to technology and
cost. Also, penetration of energy remains low as of now. Other limitations include location,
accessibility of huge area, variation in wind velocity etc. Nonetheless, the way forward lies in the
adoption of the clean and green technology.

Apart from this another important aspect of energy security is promotion of energy efficiency.
This has to be done both in terms of energy supply and consumption. In terms of production
India suffers low plant load and technological obsolescence that hampers the already short
supply of fuel. Added to this T&D losses remain very high. The government has now deployed
Super Critical and Ultra Super Critical Power Plant that has yielded a positive response. Also
Restructured Power Development and Reform program aims at controlling the transmission and
distribution losses.

For improved consumption practices Bureau of Energy Efficiency and the National Mission on
Enhanced Energy Efficiency aim at conservation and promoting best practices including
promotion of better electrical equipment/appliances/other machines. On the renewable energy
front, promotion of individual and decentralised energy forms will meet the problem of large
scale penetration. Also subsidisation on installation and commercial promotions will bring the
cost of production down, improving its accessibility and attractiveness.

Development of new partnerships like International Solar Alliance, deploying new technology to
harness the renewable better like Off-shore wind farms will help off-set probabilities of failure.

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BIBLIOGRAPHY:

The researcher has consulted following sources to complete the rough proposal:

PRIMARY SOURCES:

1. Ministry of statics and programme implication, government of India, energy statistics,

India
2. S.K. Jain, Nuclear Power in India – Past, Present and Future, World Energy Council,
India
3. Dilip Saikia, Indian Economy after Liberalisation: Performance and Challenges, Sat
parkash Katla, New Delhi

SECONDARY SOURCES:

1. WEBSITES:

a. https://www.jagranjosh.com/articles/energy-security-1478258732-1

b. http://www.ey.com/in/en/industries/oil---gas/indias-energy-security

c. https://www.iea.org/publications/freepublications/.../India_study_FINAL_WEB.pdf

d. http://www.niti.gov.in/writereaddata/files/new_initiatives/NEP-ID_27.06.2017.pdf

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